Brit caused $500bn US 'Flash Crash' from home in Hounslow, US prosecutors seek extradition - Polidicks

[QUOTE][B]Flash Crash trader Navinder Singh Sarao pictured for first time, as £5.05m bail is granted Exclusive: First image of Navinder Singh Sarao, the Brunel University graduate who worked in banking before setting up as a trader in his parents' house[/B] This is the first picture of Navinder Singh Sarao, the British trader accused of causing the £500 billion Wall St "flash crash". Mr Sarao, 36, is appearing at Westminster Magistrates' Court where he is fighting an attempt to extradite him to the US. He has been granted bail in the sum of £5.05 million, and is expected to leave court later this afternoon. [B]He faces a maximum sentence of 380 years in an American jail as a result of the allegations which emerged late on Tuesday night.[/B] He is alleged to have been at the centre of the so-called 'flash crash', which knocked the major US stock market - the Dow Jones Industrial Average - by almost 1,000 points during one 45-minute period in May 2010, triggering hundreds of billions of pounds of losses. [t]http://i.telegraph.co.uk/multimedia/archive/03276/Navinder_Singh_Sar_3276736b.jpg[/t] But appearing before Westminster Magistrates Court today, Mr Singh said he does not consent to the extradition order. Appearing in a yellow jumper and white tracksuit bottoms, and unshaven, Mr Singh spoke only to confirm his name, his address and date of birth, and to confirm he would fight extradition. He appeared alone in court, without family or friends. ... [B]Accounts for the year to October 2013 - the most recently available at Companies House - show cash on the balance sheet of £7.5m. But prosecutors allege he generated $40m (26.7m) of trading profits over a five year period.[/B] [url=http://www.telegraph.co.uk/finance/financial-crime/11555228/Flash-Crash-trader-Navinder-Singh-Sarao-pictured-for-first-time.html]Source[/url][/QUOTE]

flash trading should be illegal period. using supercomputers and reactive trade algorithms to trade on microsecond intervals is only begging for disaster, this is a witch hunt, if any of the numerous wallstreet banks that do this caused a flash crash they'd get a light fine and a sternly worded speech from the FTC

A true villain. Evil, and genius at the same time.

[quote] He is accused of being responsible for one in five 'sell' orders on May 6, 2010, the day of the 'flash crash', using automated trading software to place orders which he then cancelled, profiting as the markets fell. His company - Nav Sarao Futures - was registered to the home his parents own in Hounslow, west London, where it is believed he operated from his bedroom. Accounts for the year to October 2013 - the most recently available at Companies House - show cash on the balance sheet of £7.5m. But prosecutors allege he generated $40m (26.7m) of trading profits over a five year period. [/quote] so when some guy in his house does this its illegal, but when GETCO does it its not?

Ok so one person manipulating the stock market as such is a criminal but the people who do that professionally aren't lol

The capital gains industry is a clusterfuck.

The fact that this guy could even do this at all is a bigger indictment to the system than it is him. But we can't put the financial industry on trial so let's scapegoat some fuck that proved it's broken. How dare he do what we spent billions being able to do efficiently. And I mean efficiently. Some financial institutions moved their HQ and got direct fiber optic lines installed between them and the trading systems so they could shave milliseconds off their trade response times to get an edge on the competition. We should go back to all trades having to be manually transacted by a human. Make that mandatory, and the financial industry both slows down hypertrading and employs more people. More stability to the stock market, and it creates jobs! [IMG]http://www.facepunch.com/fp/ratings/rainbow.png[/IMG] x ∞

[QUOTE=elixwhitetail;47576786]The fact that this guy could even do this at all is a bigger indictment to the system than it is him. But we can't put the financial industry on trial so let's scapegoat some fuck that proved it's broken. How dare he do what we spent billions being able to do efficiently. And I mean efficiently. Some financial institutions moved their HQ and got direct fiber optic lines installed between them and the trading systems so they could shave milliseconds off their trade response times to get an edge on the competition. We should go back to all trades having to be manually transacted by a human. Make that mandatory, and the financial industry both slows down hypertrading and employs more people. More stability to the stock market, and it creates jobs! [IMG]http://www.facepunch.com/fp/ratings/rainbow.png[/IMG] x ∞[/QUOTE] The bitcoin folk would have a thing or two to say about that.

I don't understand It's illegal to get a computer to trade in stock for you?

[QUOTE=Sableye;47576629]flash trading should be illegal period. using supercomputers and reactive trade algorithms to trade on microsecond intervals is only begging for disaster, this is a witch hunt, if any of the numerous wallstreet banks that do this caused a flash crash they'd get a light fine and a sternly worded speech from the FTC[/QUOTE] Everyone does this though. There are thousands of companies that trade on microsecond and sometimes nanosecond intervals. [editline]22nd April 2015[/editline] What is he even accused of? I mean what law did he break?

[QUOTE=Karmah;47577253]I don't understand It's illegal to get a computer to trade in stock for you?[/QUOTE] It's the manipulation. He bids, with no intention to buy, up the price of stock. Then he withdraws the bids causing the price to drop. He then takes advantage of controlling when the stock price is high and when it is low and profits from it. It's like shilling on Ebay, except on a much larger scale. Imagine I bid up the price on an item I'm selling on Ebay, then I withdraw my bid at the last second and leave you with the next highest bid, a bid much higher than you would have made if I didn't bid against you.

[QUOTE=Karmah;47577253]I don't understand It's illegal to get a computer to trade in stock for you?[/QUOTE] Not really, he was putting up sell orders and cancelling them before they were taken up on, which caused a fall in value of stocks. It is underhanded(but legal) to sell low to decrease the value of a stock so you could buy more, it is illegal to market manipulate with orders you never intended to follow through with. He supposedly was nearly 20% of the sell orders for that day, which by any measure of speaking is utterly insane. [QUOTE]The charges of wire fraud, commodities fraud, commodities manipulation and 'spoofing' levelled at Mr Sarao carry prison sentences of between 10 and 25 years per count, or a possible $1m fine. Spoofing is the practice of bidding or offering with the intent to cancel the bid or offer before execution.[/QUOTE]

Ok so he actually tampered with the market pretty bad. It makes sense now and I think he should be extradited. However 380 years? Wow.

[QUOTE=MuffinZerg;47577459]Ok so he actually tampered with the market pretty bad. It makes sense now and I think he should be extradited. However 380 years? Wow.[/QUOTE] US crimes are additive linearly, this kind of stuff happens all the time. Heck I made a post about an incident in my own area with a child molester getting 206 years, and that was an event that was barely notable, even locally.

[QUOTE=deadoon;47577482]US crimes are additive linearly, this kind of stuff happens all the time.[/QUOTE] Oh so that's why you have so many prison inmates

That's worst case, if he's convicted of everything and gets maximum sentences. I think US prosecutors try to be open about possible sentences because some countries don't want to expose their citizens to particularly harsh punishments. So this is the worst that can happen to him. In reality this is probably going to end in some kind of plea bargain deal, assuming he is extradited.

[QUOTE=cecilbdemodded;47577492]That's worst case, if he's convicted of everything and gets maximum sentences. I think US prosecutors try to be open about possible sentences because some countries don't want to expose their citizens to particularly harsh punishments. So this is the worst that can happen to him. In reality this is probably going to end in some kind of plea bargain deal, assuming he is extradited.[/QUOTE] Goldman sachs will employ him for 380 years with no chance of parole.

[QUOTE=Sableye;47576629]if any of the numerous wallstreet banks that do this caused a flash crash they'd get a light fine and a sternly worded speech from the FTC[/QUOTE] [b](citation needed)[/b] If a 'sternly worded speech' were the only thing they'd face in exchange for millions or billions of dollars in gains, they'd be all over it. They're not. They'd get reamed by the FTC. This is pure exploitation through fraud, not some newly-discovered technical weakness of the stock trading system.

[QUOTE=catbarf;47577738][b](citation needed)[/b] If a 'sternly worded speech' were the only thing they'd face in exchange for millions or billions of dollars in gains, they'd be all over it. They're not. They'd get reamed by the FTC. This is pure exploitation through fraud, not some newly-discovered technical weakness of the stock trading system.[/QUOTE] he was a suspect in [I]one[/I] of 5 stock attacks, and last year a firm that GETCO bought out had a software "glitch" that went something exactly like this [quote]On August 1, 2012, Knight Capital deployed untested software to a production environment which contained an obsolete function. The incident happened due to a technician forgetting to copy the new Retail Liquidity Program (RLP) code to one of the eight SMARS computer servers, which was Knight's automated routing system for equity orders. RLP code repurposed a flag that was formerly used to activate the old function known as 'Power Peg'. [B]Power Peg was designed to move stock prices higher and lower in order to verify the behavior of trading algorithms in a controlled environment[/B][/quote] where was the witch hunt there? they only accidentally maipulated the stock market, no big deal, but trying to make money off of it, shame on you

[QUOTE=Sableye;47577864]he was a suspect in [I]one[/I] of 5 stock attacks, and last year a firm that GETCO bought out had a software "glitch" that went something exactly like this where was the witch hunt there? they only accidentally maipulated the stock market, no big deal, but trying to make money off of it, shame on you[/QUOTE] Hmm, quoting wikipedia with no contextual relevance are we? The other half of that paragraph shows the reality of the situation. [QUOTE]Therefore, orders sent with the repurposed flag to the eighth server triggered the defective Power Peg code still present on that server.[13] When released into production, Knight's trading activities caused a major disruption in the prices of 148 companies listed at the New York Stock Exchange, thus, for example, shares of Wizzard Software Corporation went from $3.50 to $14.76. For the 212 incoming parent orders that were processed by the defective Power Peg code, Knight Capital sent millions of child orders, resulting in 4 million executions in 154 stocks for more than 397 million shares in approximately 45 minutes.[13] This caused Knight Capital's stock price to collapse. Knight Capital took a pre-tax loss of $440 million sending shares lower by over 70% from before the announcement. The nature of the Knight Capital's unusual trading activity was described as a "technology breakdown".[14][15][/QUOTE] Wow, they lost a whole lot of money, what a great accident in their favor! Wait, no they fucked up. Why would they be punished further, when they already fucked themselves over? Even the laws in place wouldn't be able to punish them as much as they had themselves. This guy was putting sell orders and retracting them to decrease the prices of stocks. Those guys were actually trading stocks to manipulate the market, a completely different ballpark. He didn't just manipulate the market, he committed actual fraud. Also, this guy was accused of being responsible for 1 in 5 sell orders on the crash in question. Not 1 in 5 stock attacks.

[quote]He faces a maximum sentence of [b]380 years[/b] in an American jail as a result of the allegations which emerged late on Tuesday night.[/quote] I don't think anyone in their sane mind would think this is fair.

[QUOTE=MatheusMCardoso;47577983]I don't think anyone in their sane mind would think this is fair.[/QUOTE] He effectively caused a net loss of value equivalent of over 4 times the total assets of Microsoft in a single day. I think he caused a bit more damage than you are imagining.

[QUOTE=Sableye;47577864]he was a suspect in [I]one[/I] of 5 stock attacks, and last year a firm that GETCO bought out had a software "glitch" that went something exactly like this where was the witch hunt there? they only accidentally maipulated the stock market, no big deal, but trying to make money off of it, shame on you[/QUOTE] A software glitch that crashed their own stock price and was retracted as quickly as possible? You're seriously comparing that to someone using a technical exploit to commit fraud, repeatedly, over the course of five years, for personal profit? [QUOTE=MatheusMCardoso;47577983]I don't think anyone in their sane mind would think this is fair.[/QUOTE] There are twenty-two charges and the absolute maximum for each adds up to 380 years. Even if he's found guilty, the chances of him being found guilty on every charge are slim, and the chances of getting anywhere near the maximum sentence on each nonexistent.

[QUOTE=elixwhitetail;47576786]And I mean efficiently. Some financial institutions moved their HQ and got direct fiber optic lines installed between them and the trading systems so they could shave milliseconds off their trade response times to get an edge on the competition.[/QUOTE] From what I read in the past, I believe there are actually stations that some institutions rent for insane prices in the stock exchange and they all use the exact same length of fibre so that the fastest people all have near exactly the same latencies. It's insane.

[QUOTE=deadoon;47577359]Not really, he was putting up sell orders and cancelling them before they were taken up on, which caused a fall in value of stocks. It is underhanded(but legal) to sell low to decrease the value of a stock so you could buy more, it is illegal to market manipulate with orders you never intended to follow through with. He supposedly was nearly 20% of the sell orders for that day, which by any measure of speaking is utterly insane.[/QUOTE] How could they ever prove this? "it is illegal to market manipulate with orders you never intended to follow through with." Im not versed in stock trading, but what exactly changes between making a decision to just not do the order as if you were on the fence about it, and whatever he did?

[QUOTE=HoodedSniper;47578134]How could they ever prove this? "it is illegal to market manipulate with orders you never intended to follow through with." Im not versed in stock trading, but what exactly changes between making a decision to just not do the order as if you were on the fence about it, and whatever he did?[/QUOTE] It is about trends. Those will determine if it is an accident or intentional. He was constantly making sell orders and then retracting them at a speed that indicates that it was a programmed action(specifically defined as spoofing in the article.). If it only had intermittent incidences of this occuring(1 server in a cluster might send out a bad order and another retracts it for the proper one to be put up), it would be overlooked as a glitch that would need to be fixed. However, in this case 1 in 5 sell orders during the incident were linked to him, and this action. That is far more than reasonable doubt, that is a sign of deliberate and malicious actions.